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Chubb Says Ohio
Sent an Inquiry
In Insurers' Probe

By

Shira Ovide and

Theo Francis Staff Reporters of THE WALL STREET JOURNAL

Updated Nov. 3, 2004 12:01 a.m. ET

Chubb Corp.
said the Ohio attorney general's office had sent it an "investigative demand" as part of the state official's probe of possible violations of antitrust laws by insurance companies, as insurers' legal woes spread to yet another state.

A spokeswoman for Ohio Attorney General Jim Petro's office said it "is investigating the insurance industry" in the wake of investigations in other states. She declined to confirm that Mr. Petro's office has issued any subpoenas but said the inquiry centers on bid-rigging and "market allocation," or the practice of steering business to a broker's favored insurers.

Chubb, based in Warren, N.J., and one of the largest U.S. property-casualty insurers, said it plans to fully cooperate with the inquiry, which it says it received on Monday. A spokesman declined to comment further.

The disclosure of a regulatory probe, made in a filing with the Securities and Exchange Commission, comes on the heels of New York Attorney General Eliot Spitzer's investigation of alleged manipulated bids and improper payments by insurance brokers. Chubb was named, but not charged, in a lawsuit Mr. Spitzer filed against insurance broker
Marsh & McLennan Co
s.; Chubb also has said it received a subpoena from the Connecticut attorney general in that state's broad probe of the insurance business.

In Mr. Spitzer's complaint against Marsh, he alleges that Marsh had negotiated a $1 million "no shopping" agreement with Chubb, under which the broker automatically would recommend that top individual clients renew any personal insurance they held with Chubb. The complaint said that pact, never completed, would have been "a paid abdication of Marsh's duty to its clients."

In addition to being a leading insurer of wealthy individuals' homes and other personal property, Chubb also is a top seller of property-and-casualty insurance coverages to businesses. Chubb may be best known to the public for its financial backing of public television's "Antiques Roadshow," reflecting its big role insuring antiques and valuables.

Chubb has said that it isn't aware of any impending charges from Mr. Spitzer's office and that it believes neither the company nor its employees "violated any law or regulation governing compensation of insurance brokers and independent agents." The company has said it hasn't found evidence of bid-rigging by its underwriters.

In a previous statement, Chubb said it long has paid brokers in part for the volume or profitability of the business they placed with Chubb. It also cited New York Insurance Department regulatory guidance from the late 1990s to support its belief that such payments were legal. The company stressed that it hasn't ever had a "no shopping" agreement in place with Marsh or any other broker, but said the firm continues to investigate the circumstances Mr. Spitzer cites in the lawsuit.

Insurance regulators or attorneys general in New York, California, Massachusetts, Utah, North Carolina and Ohio have indicated that they are investigating insurance-industry practices.